In today’s digital age, we are constantly interacting with technology, whether it’s reading this article on a phone or computer. Our daily life is filled with countless interactions with technology, often without us even realizing it. By 2024, the digital and real worlds will be seamlessly interconnected. Consequently, our intangible digital assets will hold the same value as our tangible, physical assets.
Protecting your digital assets is a critical process that many people overlook. In this article, we define digital assets and how to protect them. We will also cover how to appoint a trusted agent to oversee your digital assets with a free printable power of attorney form.
What Are Digital Assets?
A digital asset is an item stored digitally, with proven value, and whose ownership can be transferred. The value of digital assets can be sentimental or financial. They are an important part of your holdings and need to be protected.
The following are examples of private digital assets with personal value that are not intended for sharing:
- Different types of media, such as photos, videos, audio, and text
- Social media accounts
- Email accounts
- Gaming accounts
A single individual owns these privately held digital assets, which possess some financial value.
- Cryptocurrencies
- Non-fungible tokens (NFTs)
- Central bank digital currencies
Businesses and organizations own these digital assets:
- Company logo
- Branded content
- Customer databases
To put it briefly, a digital asset is anything of value to its owner and prospective purchasers that is stored digitally.
Why Do Digital Assets Need Protection?
Your digital assets can be endangered by various risks, resulting in a loss of value, ownership, or access. There are four primary types of threats to digital assets:
- Risks like insufficient protection for customers on a virtual trading platform that are operational in nature.
- Cybersecurity risks, like hacking and phishing attacks
- Expect market risks when dealing with new and emerging investments.
- Fraud risks, like online impersonation
Three Ideal Practices to Protect Your Digital Assets
Before taking ownership, a savvy investor should be well aware of the potential risks that could jeopardize the sustainability of their digital assets. Once a digital asset is registered under your name, it is crucial to adhere to some best practices for its protection. Here are four methods to achieve this:
Implement User Authentication
Implementing user authentication measures for digital assets accessed by multiple parties, such as a company database, is crucial. Using multi-factor authentication, like requiring both a password and security question, can help ensure that only authorized individuals can interact with the digital asset.
This protects assets against data loss or theft. If an asset is tampered with or stolen, you can identify where the leak could have occurred. Limiting user access to digital assets and implementing user authentication are critical requirements for digital security.
Consult with Cybersecurity Experts
Hackers and scammers pose a threat to digital assets as they are adept at maneuvering through online security systems. If you possess highly valuable digital assets, you need to take proactive measures, such as hiring a cybersecurity company to help neutralize the risks of hackers and malware. Additionally, it’s recommended to consistently update your software and hardware to ensure your digital security measures are current.
Periodic audit trails should be performed to identify any vulnerabilities in the security system and monitor user behavior.
Always Back Up Important Digital Assets
Backing up your digital assets to a secondary virtual location, whether they are personal or professional, is crucial. Should you become a victim of a cybersecurity attack or if your hardware becomes faulty, having a fully backed-up version of your digital assets can provide significant relief.
How to Transfer Ownership or Agency of Your Digital Assets
When you are unable to safeguard your digital assets, you will desire a trustworthy individual to do so. If these assets hold financial value, you may consider bequeathing them to an heir upon your demise. However, many individuals overlook their digital assets while formulating their estate plans.
To guarantee the proper management of your digital assets, even in the event of your incapacitation, you must name a digital fiduciary. This appointed person will legally have the right to access and manage your digital assets, with your consent.
In order to designate a digital agent, it is necessary to consult with a lawyer. As another option, you could acquire a power of attorney form template from the internet, sign it together with your agent, and have it officially notarized. By doing this, you can secure the safety of your digital assets even when you’re not around, and guarantee that they are utilized (or not utilized) based on your preferences.